The company printed revenue of $96bn – beating the highest bar of Wall Street expectations. Profit more than doubled to $54bn in Q2 this year compared to a year ago. And more importantly, Nvidia said that it expects to earn $108bn (+/-2%) in the current quarter. That came in around $4bn higher than what analysts had pencilled in and would also be the first time the company breaches the $100bn bar.

Funny enough, though, these numbers alone couldn’t give Nvidia shares a boost in after-hours trading. What made the difference was the company’s CFO telling investors that the company’s revenue would grow 70% in fiscal year 2028 – and, wait – the latter would be 100% if they weren’t facing supply constraints!

The latter sent Nvidia’s shares up by more than 4.50%, confirming that despite concerns that the AI buildout could slow – whether because Big Tech companies are overinvesting to avoid falling behind in the AI race, because financing additional spending will become costlier due to the fact that they have already spent everything they had on hand to shoulder the spending of the past three years, or because they successfully build alternatives to replace Nvidia’s – the AI buildout will continue at full speed, and Nvidia will continue to put a notable part of this spending in its pockets.

Reportedly, half – yes, half – of AI data centre spending ends up in GPU purchases, and Nvidia has a market share of around 80–90%. When you think that Big Tech is expected to spend around a trillion dollars this year, and that Nvidia has a gross margin of around 75%, the back-of-the-envelope maths points to more than $300bn in potential gross profit. Even after operating expenses and taxes, that kind of earnings power makes Nvidia’s valuation look surprisingly reasonable given its growth rate. Assuming Nvidia maintains a net margin of around 60%, that would put the stock at roughly 19–20x earnings at the current price. That makes it look cheap.

And that doesn’t even take into account the $3 trillion in off-balance-sheet commitments from Big Tech companies (according to Morgan Stanley analysts who dived into these companies’ books), including data centre leases (for $1.1 trillion) and purchase agreements for chips, memory and networking gear (for an estimated $1.7 trillion).

But cheap comes with a few concerns: rising memory-chip prices have started to become a concern for Nvidia too, as its most advanced chips are very memory-intensive (though, for now, the company looks capable of passing the cost on), Big Tech leverage worries will continue to loom (and potentially rise with rising global yields and too much debt flooding the market), and the fact that Nvidia has put its weight behind many companies through investments, strategic partnerships or financing guarantees (so that they can continue building data centres and buying Nvidia chips) will not disappear overnight.

The latter could cap any fresh rally in Nvidia towards uncharted territory, but we can only admit that with these numbers, it’s impossible for investors to turn their backs on this company: it is growing fast, and it is incredibly profitable. This is not pricing in a dream; this is reality.

Elsewhere, Salesforce and CrowdStrike also reported stronger-than-expected earnings. Salesforce jumped 13%, while CrowdStrike added around 10% in after-hours trading. So Nasdaq futures lead gains this morning and the KOSPI is up, but the timid 1.33% gain there suggests that the first-half euphoria surrounding memory-chip makers is not fully coming back, as perhaps the macroeconomic leg of the story is dragging its feet.

Yesterday, a set of US data reflecting price pressures came in stronger than expected. The core PCE figure for July came in steady at 3.3% – and in line with expectations – but the July headline figure and the set of Q2 figures printed stronger-than-expected numbers. In summary, US inflationary pressures didn’t ease in July. If anything, yesterday’s numbers warned that price pressures in the US require policy action.

And the US is not an isolated case! Some European Central Bank (ECB) officials remain concerned about heated price pressures and favour further policy tightening, also encouraged by surprisingly robust euro-area growth in the face of geopolitical uncertainties and the energy crisis. ECB minutes are up next.

Earlier this week, CPI numbers from Australia came in stronger than expected, boosting rate-hike expectations for the Reserve Bank of Australia (RBA) this year. Pricing in swaps suggests that New Zealand could hike as early as next month, and the Bank of Japan (BoJ) is also running out of options, as the impact of the latest joint intervention with the US remained short-lived, sending a very clear message to Japanese officials: rates must readjust to the country’s new inflationary reality to stop bleeding in the Japanese yen.

Hence, rising global yields could cap the positive action in equity indices despite Nvidia-backed tech enthusiasm. Attention will gently turn to Kevin Warsh’s Jackson Hole speech, due Friday. The US dollar gained ground against most majors on the back of stronger-than-expected PCE reads yesterday, which boosted hawkish Fed expectations and narrowed the Federal Reserve (Fed)/other central bank policy divergence. A rebound in crude oil prices gave further support to the US dollar.

Yet, for the dollar to protect its gains, Kevin Warsh’s response to the latest intervention from the US Treasury Department should be clear and firm: he must convince investors that the Fed will remain independent, with the aim of bringing inflation back to 2% while limiting the impact on the jobs market.

If Kevin Warsh manages to restore the Fed’s credibility – which I hope he will – we could see further gains in the US dollar. If not, the dollar will come under fresh selling pressure, probably giving precious metals and other hard commodities a further boost.